LETTER TO RICHARD L NEUBERGER FROM ALLEN W. DULLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R000100050053-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: May 20, 2002
• Sequence Number: 53
• Publication Date: June 7, 1958
• Content Type: LETTER

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Dear Senator Nenb.rg.,.
Appreciate your ki fetter of J r 5 1958.
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 JOHN G. JONES
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HANS A. LINDE
aniteb 6tateg 'enate LEGISLATIVE ASSISTANT
MARY JANE CHRISTGAU
WASHINGTON. D. C. PERSONAL SECRETARY
Mr. Allen W. Dulles
Director
Central Intelligence Agency
Washington 25, D.C.
Because I relied so heavily on your excellent
speech to the U. S. Chamber of Commerce in my remarks,
I thought you might like to see the attached copy of
my Senate speech on June 3, on the subject of the
Soviet challenge to our foreign economic policies.
Thank you also for your kind letter of May 27
in reply to my questions on some related phases of
this subject.
RLN:jc
Encl.
With kind regards,
Richard L. Neuberger
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1958 CONGRESSIONAL RECORD -SENATE
voted overwhelmingly for it time and again.
They have adopted a constitution on which
a State can operate. They have sent by
popular election two Senators and a Repre-
sentative to Congress, under the historic
Tennessee plan, as evidence of their desire
to be full-fledged members of the Union.
Second. The people of the United States
favor bringing Alaska into the Union.
Cross-section groups in different parts of the
country have voted for admission by ratios
ranging all the way from 5 to 1 up to 12 to
1. The American people have believed for
years that their fellow citizens in Alaska
ought to have the right to vote in national
affairs and to participate effectively in the
work of Congress.
Third. Both political parties have prom-
ised repeatedly in their platforms to work for
statehood. The most recent time was in
1956, less than 2 years ago. Actually state-
hood for Alaska was first proposed in Con-
gress in 1916.
Fourth. National leaders of both parties
are for Alaska's entry into the Union. Pres-
ident Eisenhower, Secretary of the Interior
Seaton, and Republican Senate Leader
Knowland are three of the prominent GOP
leaders who are for admission, the President
declaring himself anew only last week.
Speaker RAY13URN is leading the Democratic
forces in the House. Adlai E. Stevenson,
Democratic standard bearer in 1952 and
1956, has spoken for bringing in a new State.
Fifth. Congress itself favors statehood
When the House voted last week on the ques-
tion of taking up the bill, the division was
217 for considering it to 172 opposed. Had
the 100 Republicans who voted "nay" known
that President Eisenhower was going to
recommend passage, the margin for Alaska
would have been much larger. As it was, the
majority was a sizable 45. Four years ago
the Senate passed a bill to admit both Alaska
and Hawaii by the heavy majority of 57 to 28.
Sixth. The population of Alaska, 212,500, is
greater than that of 22 States-almost half
the members of the present Union-at the
time they were admitted. But more im-
portant than Alaska's present population is
the rate of growth of its population. In the
first 6 years after the 1950 census, the popu-
lation of Alaska grew almost 49 percent.
Within the United States, the national aver-
age growth was about 13 percent for the same
period.
Seventh. The rich resources of Alaska de-
serve the kind of development which will
come with statehood and a still greater
growth in population. Already the timber,
metals, minerals, fish, and other products
that have come from Alaska have returned
more than 400 times the $7 million the
United States paid Russia shortly after the
Civil War. No one knows the extent of the
vast oil reserves awaiting exploration.
Eighth. Alaska is a geographical outpost
of the United States in the Pacific which
should be made a more effective part of our
defense system. In World War II Alaska was
the only part of North America invaded by
Japanese forces.
Ninth. There is no remotest question of the
loyalty of the people of Alaska. A report by
the Federal Bureau of Investigation in 1951
said there were only 10 Communists in the
entire Territory. The likelihood is that the
number is smaller now.
Tenth. Admission of Alaska will show the
world that the pioneering spirit which made
this country great is not dead. It will
demonstrate that we have not grown old and
tired, but that, on the contrary, we are ready
and willing to carry on vigorously along
frontiers.
To these 10 reasons for admitting Alaska it
would be easy to add others-as for example,
with Alaska admitted the way will be open
to exhibit the same justice and fairness to
Hawaii. Surely these 10 are enough when
the chief arguments on the other side are
little more than inertia, local pride, or
prejudice.
Pass the Alaska bill.
Make this session of Congress historic.
Infuse new blood into the Union.
MUTUAL SECURITY ACT OF 1958
The Senate resumed the consideration
of the bill (H. R. 12181) to amend fur-
ther the Mutual Security Act of 1954,
as amended, and for other purposes.
The PRESIDING OFFICER (Mr.
PROXMIRE in the chair). As a Senator
the present occupant of the chair sug-
gests the absence of a quorum; and the
clerk will call the roll.
The Chief Clerk proceeded to call the
roll.
Mr. NEUBERGER. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
GRANTS FOR CONSTRUCTION AND
EXPANSION OF PU13LIC COMMU-
NITY JUNIOR COLLEGES
Mr. NEUBERGER obtained the floor.
Mr. YARBOROUGH. Mr. President,
will the Senator from Oregon yield to
me, for the introduction of a bill?
Mr. NEUBERGER. I yield.
Mr. YARBOROUGH. Mr. President,
I introduce a bill to authorize an annual
grant of $200 million for 5 years to as-
sist States to cope with the emergency
in higher education presented by sky-
rocketing college enrollments. The bill
provides for Federal assistance in the
construction of public community junior
colleges.
Testimony which I have heard before
the Senate Labor and Public Welfare
Committee indicates that the number of
potential college students in the United
States will be doubled by 1970. Unless
immediate steps are taken to construct
buildings to accommodate them, the
children of the veterans of World War II
and the Korean conflict will be denied
opportunities to attend college, simply
because there will not be room for them.
Today, many high-school graduates
are being denied an opportunity to go to
college, simply because the colleges say
they are full and have no more room.
This is a denial of the American dream
of a college education for every boy or
girl who wants it and is capable of mas-
tering the courses.
This bill provides grants for extension
of existing public junior college facilities,
or the establishment of new facilities. It
provides for the development of State
and local junior colleges, with special
priority to the areas in need of higher
educational facilities. States whose
plans are approved will receive a flat
Federal grant, with additional funds.to
be matched by the States.
The bill leaves wholly under the States
control of these public junior colleges.
There is no danger, under this bill, of
Federal control of junior colleges.
The failure to provide adequate edu-
cational facilities for the young people
of America is leading to the waste of the
8961
greatest of all our resources, our human
resources.
In the next 15 years, the college popu-
lation of Texas alone will increase by 75
to 100 percent, and similar increases will
take place throughout the rest of the
Nation. There are 32 public junior col-
leges in Texas, and additional ones are
authorized and are in the process of for-
mation. If our society is to continue to
grow and to develop, we must be alert to
the particular needs of our times. The
junior college represents a movement
which has grown out of the educational
needs and demands of our people.
The construction of public community
junior colleges will be of distinct value
to the Nation, as we strive to meet the
urgent need for more and more highly
skilled people. The junior college has
played a very important role in Texas,
because it has given thousands of stu-
dents-who otherwise might not have
been able to afford post-high-school
study-an opportunity to pursue their
studies beyond the high school. The
outstanding contribution of the public
junior college program throughout the
Nation warrants our attention now.
Through its expansion, the Nation's ur-
gent need for more semiprofessional per-
sonnel can be met. The expansion of
public junior community colleges, which
the bill provides, would be as significant
to the future of this country's world
leadership and industrial productivity as
the land-grant college legislation has
been for 96 years.
For the future security of the Nation
and for the continued fulfillment of our
Nation's educational goals, we must rec-
ognize the need for the continued devel-
opment of the community junior college.
So, Mr. President, I introduce, for ap-
priopriate reference, a bill to provide for
Federal assistance for the construction
and expansion of public community
junior colleges.
The PRESIDING OFFICER. The bill
will be received and appropriately re-
ferred.
The bill (S. 3932) to provide for Fed-
eral assistance for the construction and
expansion of public community junior
colleges, introduced by Mr. YARBOROUGH,
,was received, read twice by its title, and
referred to the Committee on Labor
and Public Welfare
Mr. YARBORO H. I thank the
Senator from eg fo yielding to me,
so that I might t d e a bill which I
believe to be on - important sub-
Mr. NEUBERG Mr. President, I
have been very y to yield to the
Senator from Tex or the introduction
of so important a ure.
SELECT COMMITTEE TO STUDY
FOREIGN ECONOMIC POLICY
Mr. NEUBERGER. Mr. President, I
now come to the subject on which it
is my privilege to address the Senate
today.
Mr. President, from all sides we see
mounting evidence of the great chal-
lenge which confronts the United States
today in the realms of international eco-
nomic policy.
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CONGRESSIONAL RECORD -SENATE June 3
This challenge is not as dramatic as
the conquest of space and the threat of
intercontinental ballistic missiles armed
with nuclear warheads.
It is not as immediate as the terrible
crisis facing the Atlantic community in
France and in north Africa, or as the
potentially explosive power struggles in
the Near East.
It does not lend itself to oratory as
readily as does, for example, the ideo-
logical battle between the Communist
doctrines of dialectical materialism and
the democratic philosophy of individual
liberty.
This challenge in the real of interna-
tional economic policy is not even ex-
clusively one that can be pin-pointed as
coming from an adversary-from com-
munism or Soviet Russia-although the
challenge of Mr. Khruschchev is very
explicit indeed, and backed by imprsesive
displays of present and potential per-
formance.
Nevertheless, the mounting evidence
indicates that the fate of the world in
our lifetime is more likely to be deter-
mined by the success or failure of the
free democracies' economic systems, of
their interrelationship, and of our eco-
nomic policies, than by either atomic war
or ideological debate.
To the so-called uncommitted , na-
tions-and that means largely the un-
derdeveloped countries whose people
have only' recently emerged from colo-
nial bondage, carrying with them deep-
seated resentment and suspicion of
western and capitalist institutions-Mr.
Khrushchev offers the vision of economic
and industrial development under the
harsh but rapid forced-draft patterns of
Communist Russia and China. Here, the
fate of our competing political systems
and philosophies will hang in the bal-
ance of a choice that will be made on
economic grounds.
To the older, more developed coun-
tries, the Soviet leaders offer glittering
promises of trade with what they con-
fidently predict will soon be the largest,
richest, most powerful bloc of nations in
the world-offers which can promise
more favorable terms than are available
in the west because they are made in a
context of foreign policy, independent
from the short-run needs and fluctua-
tions of any domestic commercial mar-
kets within the Communist bloc.
We have had ample warnings that
such Soviet sallies on the international
economic front are effective-and their
future effectiveness will be in direct re-
lation to whatever opportunities are
opened or closed to them by the success
or failure of our own international eco-
nomic policies.
Furthermore, we have recently seen
ample evidence that economic issues are
basic points of challenge to our foreign
policy, quite apart from anything the
Soviet Union has done or may do. We
confront it in the development of a com-
mon market and other integrated eco-
nomic institutions in Western Europe,
which-if they are not destroyed by the
present French crisis-will inevitably
carry with them crucial political conse-
quences. We have seen such evidence in
our own hemisphere-even in our rela-
tions with our great and close neighbor
and ally, Canada, where Soviet policies
certainly have played no role.
American, not Russian, economic pol-
icies are the issue in the worsening of
our relations with Canada, and, Amer-
ican, not Russian, economic policies are
widely agreed to be the issue in our re-
lations with the Latin American nations,
where the Vice President received such
mixed receptions recently. For the time
being, the United States, along with the
older western democracies of Europe and
the Commonwealth, still constitutes in-
comparably the strongest, richest, most
influential economic unit and factor in
the world economy. The challenge that
faces us is whether or not we can so or-
ganize and apply our policies that this
strength and wealth will serve not merely
the economic objectives which we have as
a Nation-not merely the goals of pros-
perity and security of the individual seg-
ments of our internal economy-but also
the greater, noneconomic objectives of
our national interest in the, modern
world. The challenge, in brief, is
whether or not we can make foreign eco-
nomic policy serve the ends of foreign
policy, as well as those of our domestic
economy.
SENATE STUDY NEEDED NOW
Mr. President, I propose that the Sen-
ate prepare to respond to this challenge
while it is still of manageable propor-
tions; while we still have time to meet
it in an orderly fashion, on the basis
of adequate information, study, and pub-
lic deliberation. Too often, the Congress
is criticized for being shortsighted, for
facing only the issue immediately before
it at the moment, and for habitually
investigating only at the moment of
crisis or disaster problems to which oth-
ers had vainly sought to draw attention
before it was too late.
For a considerable time, responsible
leaders from President Eisenhower on
down have been drawing our attention
to the problems of our foreign economic
policies. The frequency and intensity
of the danger signals have increased
rapidly in recent months, and I shall re-
fer to some of them later. From time to
time, in the past, studs have been made
by Presidential commissions and under
various private auspices, which have re-
sulted in the accumulation of valuable
knowledge and policy ideas. But the ul-
timate responsibility for enacting into
law any such, policies remains with the
Congress, and it is to the Congress that
the American people most particularly
turn in such matters as economic poli-
cies, that have a pocketbook impact
.within our own country.
I propose no such specific policies to-
day. But I do propose that, at this im-
portant juncture, the Senate act now by
undertaking its own study of the chal-
lenge facing us in the realm of interna-
tional economic policy, and of the
economic foreign policies we shall need
to meet that challenge.
To this end, Mr. President, I submit
today a Senate resolution to create a
Select Committee on Foreign Economic
Policy, for the relatively brief span until
June 30, 1959, to undertake studies of
American foreign economic policy as
specified in more detail in the text of
the resolution. I am honored to have, as
cosponsors of this resolution, a group of
our distinguished colleagues that include
the chairman of the Committee on For-
eign Relations, the senjor Senator from
Rhode Island [Mr. GREEN], the Sena-
tors from Alabama [Mr. Hill. and Mr.
SPARKMAN], the junior Senator from
Massachusetts [Mr. KENNEDY], the jun-
ior Senator from New York [Mr. JAVITS],
the junior Senator from Louisiana [Mr.
LONG], the junior Senator from Pennsyl-
vania [Mr. CLARK], and the junior Sena,-
tor from Minnesota [Mr. HUMPHREY].
I ask unanimous consent that the text
of the proposed resolution be printed in
the RECORD at this point, and I shall ex-
plain it further at a later stage in my
remarks.
The PRESIDING OFFICER. The res-
olution will be received and appropriately
referred.
The resolution (S. Res. 312) to estab-
lish a Select Committee on Foreign Eco-
nomic Policy, submitted by Mr. NEU-
BERGER (for himself and other Senators),
was referred to the Committee on For-
eign Relations, as follows:
Whereas the foreign policy of the United
States is necessarily affected, both in its
ends and its means, by the economic posi-
tion and policies of the United States and
other nations;
Whereas the United States is being re-
peatedly and vigorously challenged by the
U. S. S. R. to a worldwide competition in the
field of international economic policy;
Whereas the degree and manner in which
International economic policy should be in-
tegrated with the objectives and instruments
of United States foreign policy has not been
adequately examined and clarified;
Whereas important and radical changes
have occurred in the world situation in re-
cent decades, including historic develop-
ments concerning the independence of na-
tions, their economic and political relation-
ships to each other and to the United States,
and their relative strength;
Whereas in the course of these historic
developments of the past quarter century,
economic policies have increasingly become
integral elements of national foreign policies,
pnd are now being actively and effectively so
used by the U. S. S. R.;
Whereas trade among the western democ-
racies of the Atlantic community, constitut-
ing in itself almost one-half of all world
trade, represents a vital element of the eco-
nomic and political interdependence of the
free world that is a key premise of United
States foreign policy;
Whereas six western European democracies
have newly formed a European Economic
Community to encompass 162 million people
in the most highly developed region of that
continent, and there are plans to develop a
wider trade area with the collaboration of
Great Britain, members of the Common-
wealth, and other western democracies such
as Scandinavia, which has recently formed
its own trade area;
Whereas there has been no comprehensive,
objective public examination of the foresee-
able economic and political impact of these
modern world developments, and their sig-
nificance for the international position, ob-
jectives, and policies of the United States;
Whereas the Senate has special responsi-
bilities for measures to foster commercial
intercourse with foreign nations and for
other measures to the end that the foreign
policies of the nation may be promoted: Be It
Resolved, That there shall be established
a Select Committee on Foreign Economic
Policy, which shall undertake thorough and
objective studies of the extent to which
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1958 CONGRESSIONAL RECORD - SENATE 8933
United States economic policies serve, fall to
serve, and should serve the national interest
under present and foreseeable world condi-
tions, to the end that these studies and rec-
ommendations based thereon may be avail-
able to the Senate in considering United
States international trade policies for the
future.
SEC. 2. (a) The select committee shall be
composed of 4 members of the Senate Com-
mittee on Foreign Relations, 4 members of
the Senate Committee on Finance, and 4
members chosen from the Senate at large.
Members from the respective committees of
the Senate shall be selected equally from the
two political parties by the chairman of said
committees. Members from the Senate at
large shall be chosen equally from both par-
ties by the Vice President.
(b) Any vacancy in the membership of the
select committee shall not affect its powers
and shall be filled in the same manner as
provided for in determining the original
membership.
(c) The chairman of the select committee
shall be designated by the chairman of the
Senate Foreign Relations Committee.
(d) Seven members of the select commit-
tee shall constitute a quorum.
SEC. 3. The select committee shall, without
limiting the scope of the study hereby au-
thorized, direct its attention to the following
matters:
(a) The relationship between the economic
needs and objectives of nations and their
political relations and policies in inter-
national affairs.
(b) The manner and effect of the use of
economic means, including trade,"as instru-
ments of political foreign policy by the So-
viet Union, and by other past and present
totalitarian regimes.
(c) The conditions under which, and the
methods by which, trade, taxation, monetary,
and other economic policies can and should
be more effectively utlized to further the
overall foreign policy objectives of the United
States.
(d) The significance, for United States for-
eign policy objectives, of the speed of, and
sources of capital for, economic expansion
in the non-Communist world.
(e) The economic, political, and military
implications of the developing European
Economic Community and the proposed Euro-
pean free trade area, including their effects
upon United States foreign trade and policy
in both the short-run and the long-run.
(f) The manner in which the United
States should respond to these developments
of closer economic and institutional inter-
relation in the free world-by reviewing and
modifying its own trade and tariff policies in
any direction, by encouraging and negotiat-
ing the broadening of these market areas into
wider, multilateral trading arrangements, by
participating in the creation of new institu-
tions to include the United States, or any
other means.
(g) The extent to which controls over in-
ternational economic relations have assumed
importance as aspects of foreign policy, and
the extent to which the tariff and other such
controls have diminished in importance as a
factor, directly or indirectly, in the collec-
tion of Federal revenue.
(h) The degree to which United States
policy toward economic relations with other
nations, including modifications of tariff
rates and other controls over trade, should
depend upon reciprocal action by other coun-
tries, and the extent to which it should be
unilateral, and the suitability of the uncon-
ditional most-favored-nation policy in the
light of present world conditions.
(i) The economic and commercial factors
affecting the determination of United States
policies in the national interest such as, for
instance, the problem of imports from non-
Communist countries having abnormally low
wage standards, and the gradual shift in
United States economic dependence from
commodity exports toward resource imports.
(j) The effects upon the American econ-
omy as a whole, its human and material re-
sources, and upon regions and groups within
it, of any substantial modifications, in any
direction, of United States tariffs or other
international trade policies as part of United
States foreign economic policy.
SEC. 4. The select committee shall transmit
to the Senate not later than June 30, 1959,
the results of the study herein authorized,
together with such recommendations as may
at that time be found desirable.
SEC. 5. In the conduct of this study full
use may be made of the experience, knowl-
edge, and advice of private organizations,
schools, institutions, and individuals. The
select committee may divide the work of the
study among such groups and institutions as
it may deem appropriate and may enter into
contracts for this purpose. Full use shall be
made of studies and plans prepared by execu-
tive agencies, and such agencies are re-
quested to give the select committee, or any
of its authorized study groups of consultants,
such assistance as may be required.
SEC. 6. (a) For the purposes of this reso-
lution the select committee is authorized to
employ, on a temporary basis through June
30, 1959, such technical, clerical, or other
assistants, experts and consultants as it
deems desirable. The expenses of the com-
mittee under this resolution, which shall not
exceed $300,000, shall be paid from the con-
tingent fund of the Senate upon vouchers ap-
proved by the chairman of the select com-
mittee. The chairman may designate one or
more members who may act for him for the
purposes of this resolution.
(b) For the purposes of this resolution,
the select committee, or any duly authorized
subcommittee thereof, is authorized to hold
such hearings, to sit and act at such places
and times, to require, by subpena or other-
wise, the attendance of such witnesses and
the production of such books, papers, and
documents, to administer such oaths, to
take such testimony, to procure such print-
ing and binding, and to make such expen-
ditures as it deems advisable. The select
committee shall cease to exist at the close
of business on June 30, 1959.
Mr. NEUBERGER. Mr. President, it
seems to me this is a particularly aus-
picious and pertinent time to submit
such a resolution. In the House of Rep-
resentatives debate is about to begin on
the administration's recommendation to
extend the reciprocal trade program for
5 years. I wish to say parenthetically
that I support the administration's
proposal in that respect.
Today we in the Senate are debating
the Mutual Security Act of 1958, as re-
ported by the Foreign Relations Com-
mittee. I also wish to add parentheti-
cally that I support the program as rec-
ommended by the administration and as
reported by the Foreign Relations Com-
mittee. Although, of course, I may vote
for some amendments which would im-
prove the program, I do support the
program in general.
Thus at this moment there is before
the Senate and the House of Represen-
tatives vital proposed legislation which
pertains to American economic policy in
the sphere of foreign relations.
Mr. President, I have said that in
submitting this resolution, I do not in-
tend to promote any proposals with re-
spect to any particular phase or program
of our economic foreign policy. Two of
the most important are these programs
that will be before us in the immediate
future-the mutual security authoriza-
tion, which is before us this week, and
the extension of the Reciprocal Trade
Agreements Act, which will soon fol-
low. It is my expectation that both of
these bills, which I support, will have
been dealt with by the Senate on their
own merits before the study I propose
will get underway. That study should
provide the basis for intelligent, in-
formed and rapid action by the 86th
Congress on whatever new, further, or
different programs may then prove nec-
essary to meet the gathering threats to
our national interests in the inter-
national economic field.
However, while this resolution will and
should have no relation to the specific
substantive bills on which the Senate will
act at this session, I refer to them now
only to illustrate Pow important it is that
public study and attention be given to
the foreign policy aspects of programs
which, because of 'their impact on do-
mestic American interests, are so widely
regarded and judged only from that
domestic point of view.
This is true of the mutual-security
program. Foreign aid is not apt to be a
popular label under the best of condi-
tions, and it is doubly vulnerable at a
time when many thousands of Ameri-
cans, in communities throughout the
country, have good cause to point to the
need of economic expansion and pros-
perity right at home. And it is even
more true of the reciprocal trade pro-
gram. Trade policy by its nature must
lie at the heart of the foreign economic-
policy problems of which I speak today;
yet under our private trading system, it
is also a direct factor in domestic econ-
omic policy. We cannot isolate the two,
as a totalitarian government can.
RECIPROCAL TRADE KEY PHASE OF ECONOMIC
POLICY
Thus, the case of trade policy today is
one important illustration of the need
for the broader study I propose. Very
soon, the Senate will once again debate
and act on the basic legislative instru-
ment of our international trade poli-
cies-the Trade Agreements Act. The
bill to renew that act, H. R. 10368, is now
running the first steps of the Congres-
sional gantlet in the House Committee
on Ways and Means. In urging its pas-
sage, President Eisenhower has told us:
The enactment of this legislation-un-
weakened by amendments of a kind that
would impair its effectiveness is essential to
our national economic interest, to our secur-
ity, and to our foreign relations.
Gov. Adlai E. Stevenson has said:
It would be folly not to give the President
the authority he needs and to hobble our
leaders at the conference table or in the cold
war. Surely it would be unthinkable to re-
fuse to renew the Reciprocal Trade Act, and
for at least 5 years, in order to create some
permanence about our intentions.
Strong statements in support of con-
tinuing the reciprocal trade agreements
program have come from former Presi-
dent Truman, Vice President Nixon, the
Senator from Texas, Mr. Johnson,
Speaker of the House Sam Rayburn,
Secretary of State Dulles, Secretary of
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 8964
Commerce
leaders.
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CONGRESSIONAL RECORD -SENATE
Yet once again this year we have
heard widespread predictions that the
trade agreements extension bill faces
perhaps its most critical test since Cor-
dell Hull initiated the program in 1934;
that the President can hope only for a
much shorter extension than the 5 years
he has, asked, and even this only at the
cost of destructive amendments or con-
cessions.
What these predictions reflect, of
course, is the fact that our country is in
its most serious economic recession since
World War II, with the highest rate of
unemployment since 1941. Industries
are idling along at a fraction of capacity,
with workers on short weeks or laid off;
lumber and plywood mills in my State
are facing abrupt drops in demand and
prices; mines are shut down for lack of
a market at a price level that would meet
production costs-these are conditions
that must react adversely on a program
of reciprocal international trade, as
American producers in a shrinking mar-
ket ask Congress to erect barriers to keep
American purchasers from buying
abroad.
It is natural, particularly under con-
ditions of depressed American markets
as we have today, that our international
trade policy will be judged by many in
narrow economic terms. Those who are
most directly affected by it and there-
fore most vocal about it-exporters,
importers, producers of goods that face
competition from imports-naturally
think of international trade primarily in
relation to their own markets. Besides,
it is the ancient tradition, at least in the
capitalist world, to think of trade be-
tween countries as a commercial func-
tion, in aid or hindrance of the domestic
economy. That emphasis is inherent in
the term "trade" itself.
Mr. President, I believe the reciprocal
trade program we have followed for the
past quarter century has proved to be NEEDED
t i
ti
l
i
th
b
t
t
f
n
our na
ona
n
e
es
eres
s o
econ- That is why I believe that a Senate
omy. It can and will be defended on the study, such as I have proposed, should
basis of its direct, economic benefits to be directed at the overall field of Ameri-
the American people. I support its con-
tinuation, and I am confident that the
Trade Agreements Act on which it is
based will be extended at this session of
Congress.
TRADE POLICY MUST BE RELATED TO FOREIGN
POLICY
However, its not reciprocal trade poi-'
icy, but American foreign policy, about
which I speak today. I expect to speak
more specifically in support of the trade
agreements program when that comes
before us; but today I refer to it only
as one aspect of our foreign economic
policy. In today's world our interna-
tional trade policies have far more than
commercial significance. Of necessity,
they are an essential, integral part of
our total economic foreign policy.
Trade policy must be judged by and
adapted to the objectives of our total
foreign policy. For compared to those
objectives, to the magnitude of the
stakes, and to the amounts and efforts
we invest each year in'other means for
their attainment, the purely commercial
impact of most of our international
trade shrinks into relative insignificance.
Thus we need trade policies that will aid
and support our foreign policies when-
ever possible; and certainly we cannot
afford to adopt, for domestic economic
reasons, trade policies that would actu-
ally contradict and impair the atjtain-
ment of our foreign-policy objectives.
These propositions sound fairly self-
evident in principle, Mr. President. But
as a matter of fact, we do not now have
any comprehensive, documented, widely
understood factual basis for judging
what they mean in practice. To my
knowledge, the relationship between our
international trade and our overall eco-
nomic and other foreign policies has not
been directly and specifically studied by
the Congress. -
Trade is a key factor in our interna-
tional relations; yet so far as I have
learned in my limited experience in the
Senate, trade bolicy is not studied as
part of our foreign policy, in conjunc-
tion with other aspects of foreign policy
which are closely related to interna-
tional trade in the overall world eco-
nomic picture-for instance, our pro-
grams of economic aid and technical
assistance to productivity in underde-
veloped countries.
To give only one example, we have long
heard the slogan "trade, not aid." That
slogan may be unrealistic, for trade de-'
Pends on exportable surpluses, and much
of our economic and technical assistance
has gone to precisely those countries
that needed to restore deficits in their
war-destroyed economies or create new,
undeveloped capacity, rather than hav-
ing surpluses to trade with. But what-
ever may be the interrelation between
American aid programs and interna-
tional trade, the two are not studied in
relation to each other. The Senate does
not act on a single, integrated plan of
American foreign-policy interests in the
world economy.
UNIFIED STUDY OF FOREIGN ECONOMIC POLICY
can foreign economic policy-that- is to
say, at the relationship of economic ends
and economic means to the noneco-
nomic ends and the noneconomic means
of American policy in the modern world.
Foreign economic policy, as so con-
ceived, obviously involves far more than
international trade. The study t pro-
pose must be far broader than a study
directed specifically at trade and tariff
policies; but the latter are of sufficient
importance that I thought they should
be given special significance, in deter-
mining the composition of the commit-
tee that should make such a study.
The select committee, as my cospon-
sors and I have proposed it in our reso-
lution, would be Eomposed of 12 mem-
bers, drawn equally from both parties
in the Senate. In this particular in-
stance, it has seemed to me important
to avoid any unnecessary question of
political partisanship in the study of
issues which are vital to the national
interest abroad as well as at home. The
function of this committee is intended
to consist of undertaking serious, fac-
June 3 '
tual and objective studies in a difficult
and important field of national policy-
not to report legislation, nor to make
any "investigation" in the popular sense
of that term, for which the definition
of a majority and a minority responsi-
bility might be appropriate.
Of the 12 members, 4 would be from
the Committee on Foreign Relations, be-
cause of its obvious primary concern
with the subject of foreign economic
policy as an aspect of our foreign policy.
Four would be from the distinguished
membership of the Committee on Fi-
nance, because of that committee's
thorough familiarity with our trade and
tariff Policies, and because insofar as
the studies result in conclusions for fu-
ture legislative policies, some of those
policies would be likely to fall within
its jurisdiction. The 4 remaining mem-
bers would be appointed by the Vice
President from the Senate at large, 2
from each party.
I recognize that other Senate corn-
-mittees-for instance, the Committee on
Interstate and Foreign Commerce, the
Committee on Banking and Currency,
and the Committee on Agriculture and
Forestry-also have important stakes in
aspects of our foreign economic poli-
cies-as, indeed, we all do. That is pre-
cisely a measure of their importance
to the Nation as a whole.
For example, Mr. President, I am a
member of the Senate Committee on In-
terior and Insular Affairs, on which
committee I serve under the chairman-
ship and guidance of the able senior.
Senator from Montana [Mr. MURRAY].
We have before that committee now for
consideration proposals from the Secre-
tary of the Interior under which certain
domestic mineral products would be sub-
sidized in order that they not be too
heavily damaged by competition from
minerals brought to America from
abroad.
I cite this merely to indicate that near-
ly all the great committees of the Sen-
ate, with few exceptions, are involved to
some degree in our economic policies
which impinge on our foreign relations.
This question of the composition of
the committee will no doubt be given
serious attention by the committee to
which the resolution is referred for ac-
tion. The important thing is that we
obtain a unified look at and analysis of
this field of policy, rather than ap-
proachingIt from a series of narrow and
limited aspects, as the 6 blind men
diversely describing an elephant in the
fable It is for that important central
reason that we are proposing this bi-
partisan and temporary Select Commit-
tee on Foreign Economic Policy.
TRADE NO LONGER PURELY COMMERCIAL
INTEREST
Mr. President, I said earlier that it
seems like a self-evident principle that
our economic policies toward other na-
tions must aid, not contradict or impair,
our overall foreign policies. This ap-
plies to our trade policies, including
tariffs, in these difficult and perilous
times, when so much more depends up-
on the success of our foreign economic
policies for our national interest in the
long run than the prosperity of any sin-
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CONGRESSIONAL RECORD -SENATE
gle domestic interest. Yet if that prin-
ciple is accepted by responsible people
today, it is nevertheless actually a new
development, based on the historic
lessons of the past 3 decades.
For until the long and tragic series of
worldwide crises that began with the
great depression of the 1930's, trade pol-
icy was everywhere regarded only as a
form of governmental action in aid of
private commercial interests. Actually
the tariff is, of course, one of the old-
est-if not the very oldest-economic
issue in American politics, along with
the issue over hard or soft money. The
historical tradition has been to regard
it as a purely economic issue-phrased
in terms of the controversy over tariffs
for revenue, or tariffs for protection;
the controversy between American f arm-
ers who exported grain, cotton and to-
bacco, and the domestic producers for
whom the tariff became the instinctive
refuge against every adverse turn in the
American market. The Smoot-Hawley
tariff of 1931-that record-high schedule
of import duties from which the reduc-
tions made under the reciprocal trade
agreements are calculated-was itself
such a reaction to the depression which
began in 1930, a reaction based wholly
on considerations of domestic, not for-
eign, policy.
In that depression, Mr. President, the
United States at first reacted in the tra-
ditional way of seeking purely national
solutions to its grave and painful eco-
nomic problems. So did the great Euro-
pean industrial and trading nations, as
the depression spread to that continent.
Manipulation and control of foreign eco-
nomic transactions began as a measure
of desperate economic self-defense.
Within a few years, the spread of po-
litical totalitarianism turned such con-
trols into potent instruments of foreign
policy-instruments which served Ger-
man political penetration in Europe and
the Near East, and Japanese expansion
in the Far East for purposes which were
political,and strategic as much as com-
mercial, and which ultimately paved the
way for naked aggression, domination
and war.
At no time since World War II have
international economic problems, rela-
tionships and economic foreign policies
played so large a role in the world situ-
ation as they do again today. For 10
years-since the Russian blockade of
Berlin in 1948, which was met by the
spectacular Western airlift to that en-
circled city-our foreign policy has been
based upon the premise of a primarily
military and aggressive threat from the
Soviet world. In response to this threat,
the economic programs of the original
Marshall plan were given a new, military
emphasis in the development of NATO
and the mutual security program. That
program, as it comes before the Senate
again this week, still maintains such
emphasis on defense against the threat
of military aggression, not only in
Europe, but in Asia, in Africa, even in
Latin America. The same premise un-
derlies the pacts and alliances we have
sponsored in the Far East and the Mid-
dle East, as well as policy pronounce-
ments such as the so-called Eisenhower
doctrine for the latter area.
Throughout this cold-war decade, we
have been conscious of the great mili-
tary might of Soviet Russia. Yet, until
very recently, Americans did not regard
Russia as a serious competitor in eco-
nomic and other peacetime fields of en-
deavor. Any remaining illusions of
Russia as a country of backward serfs
being driven reluctantly onward by
terror and despotism has now been
rudely shattered by the sputniks. We
shall be better off for no longer under-
estimating the competition we face. But
evidence of a change in the nature of
that competition has been accumulating
both before and after the U. S. S. R.
demonstrated its dramatic technological
progress by launching the first earth
satellite. It has been accumulating
while our own preoccupation, in Europe,
in the Middle East, and in Asia has
continued to be with the threat of pos-
sible military aggression.
NEW COMMUNIST THREAT IS ECONOMIC MORE
THAN MILITARY
In the recent past, we have from time
to time heard of instances of Soviet eco-
nomic activity beyond the borders of
Russia-of Soviet aid for streets in Af-
ghanistan, Soviet offers of assistance to
Egypt, Syria, and other 'areas of the
Middle East, Soviet trade proposals to
West Germany, Great Britain and Latin
America. But only very recently have
we begun to look at the total magnitude
of the present and prospective Com-
munist international economic effort.
Former Secretary of State Dean Ache-
son pointed out in a speech in Detroit on
May 3 that the export of capital, in the
form of production equipment, is the
fundamental means of development for
the economies of the underdeveloped na-
tions. He stated:
The Soviet Government is well aware of
this. Since 1953 it has put out $1.6 billion
of capital export commitments in 19 coun-
tries under the supervision of over two thou-
sand Soviet technicians. This could be the
course of such countries as India, Brazil, the
Philippines, and others, if the free world
economic system should not operate effect-
ively. Governments which do not respond to
the economic needs of their countries do not
stay in power.
Both the manner in which the Soviet
Union is moving to take advantage of
every opportunity of economic penetra-
tion, and its increasing capacity for
doing so effectively, were recently de-
scribed in a most informative and en-
lightening speech by Mr. Allen W. Dulles,
Director of Central Intelligence, to the
Chamber of Commerce of the United
States. I regard Mr. Dulles' speech of
such importance that I wish every mem-
ber of the Senate would read it, and that
I could include its entire text in the REC-
ORD with my present remarks, for this
speech by the head of our Central Intel-
ligence Agency shows more convincingly
than anything I can say, why we need
congressional study and readiness for
action in the field of foreign economic
policy now.
Since the length of Mr. Dulles' speech
makes this impossible, however, I shall
only read a few excerpts from it now.
This is how he states the new challenge
we face, since the direct military threat
and bluster of the post-war Stalin era
8965
was halted by our response through
NATO and other defensive preparations:
Today the Soviet Union, through its very
vocal leader, Khrushchev, is directly chal-
lenging the United States in the fields of
industrial development and foreign trade
and aid as well as in military matters. The
other day he remarked, "To the slogan that
says 'let us arm,' we reply with the slogan, 'let
us trade'."
The economic challenge is a dual one.
They are setting goals for their own domestic
production to compete directly with our
own and to quote their words, "to get ahead
of us in the economic race." The other
phase of their challenge is through their
foreign economic penetration program.
The progress which the U. S. S. R.,
through its continuing program of
forced-draft industrialization, is making
toward both these goals is indicated by
a series of statistical data given by Mr.
Dulles. I ask unanimous consent to
have printed in the RECORD at this point
in my remarks extensive excerpts from
the speech by Mr. Allen W. Dulles.
There being no objection, the excerpts
were ordered to be printed in the REC-
ORD, as follows:
Comparison of the economies of the
United States and the U. S. S. R. in terms of
total production of goods and services indi-
cates the U. S. S. R.'s rapid progress.
Whereas Soviet gross national product was
about 33 percent that of the United States
in 1950, by 1956 it had increased to about
40 percent, and by 1962 it may be about 50
percent of our own. This means that the
Soviet economy has been growing, and is
expected to continue to grow through 1962,
at a rate roughly twice that of the economy
of the United States. Annual growth over-
all has been running between 6 and 7 per-
cent, annual growth of industry between 10
and 12 percent.
These rates of growth are exceedingly
high. They have rarely been matched in
other States except during limited periods
of postwar rebuilding.
A dollar comparison of U. S. S. R. and
United States gross national product in 1956
reveals that consumption-or what the So-
viet consumer received-was less than half
of total production. It was over two-thirds
of the total in the United States. Invest-
ment, on the other hand, as a proportion of
gross national product in the U. S. S. R.
was significantly higher than in the United
States. Furthermore, investment funds in
the U. S. S. R. were plowed back primarily
into expansion of electric power, the metal-
lurgical base, and into the producer goods
industries. In these fields, it was over 80
percent of actual United States investment
in 1956, and in 1958, will probably exceed
our own. Defense expenditures, as a pro-
portion of gross national product in the
U. S. S. It., were significantly higher than
in the United States; in fact about double.
Soviet industrial production in 1956 was
about 40 percent as large as that of the
United States. However, Soviet heavy in-
dustry was proportionately larger than this
overall average, and in some instances the
output of specific industries already ap-
proached that of the United States. Output
of coal in the U. S. S. R. was about 70 per-
cent of that of the United States, output of
machine tools about double our own and
steel output about half.
Since 1956, Soviet output has continued
its rapid expansion. In the first quarter of
1958, Soviet industrial production was 11
percent higher than a year ago. In com-
parison, the Federal Reserve Board index
shows a decline of 11 percent in the United
States.
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According to available statistics, in the
first quarter of 1958, the Sino-Soviet bloc
has for the first time surpassed the United
States in steel production. The 3 months'
figures show that the U. S. S. R. alone
turned out over 75 percent of the steel toli-
nage of the United States.
Mr. NEUBERGER. Let me read only
one conclusion stated by Mr. Dulles on
the basis of the statistics of recent Soviet
development, which takes on special
meaning at this time of recession, when
our own economy is actually being per-
mitted to shrink. He states:
These (Soviet)- rates of growth are exceed-
ingly high. They have rarely been matched
in other states except during limited periods
of postwar rebuilding.
This is the image and the pattern
which the U. S. S. R. offers, for emula-
tion, to the underdeveloped nations that
yearn desperately for rapid economic
growth-while the image of capitalist
America is one of recession, shrinkage,
and inability to plan and sustain con-
tinued constructive development.
Beyond offering a tempting pattern,
however, Soviet economic growth of the
dimensions shown by the CIA's statistics
has also made possible the active entry of
Soviet Russia into international trade.
Thus the Soviet Government is aggres-
sively seeking, and achiving, expanded
trade with western nations, including
the key industrial nations of Europe-,
Germany and Great Britain.
We have seen a dramtic recent ex-
ample in the sales of Russian aluminum,
particularly in the British market, which
have driven the world market price down
2 cents a pound or more, at a time when
western aluminum producers in Canada,
in the United States, Norway, and else-
wher already face difficult problems of
temporary excess capacity.
I digress at this point to say that I
have been particularly aware of the Rus-
sian impact on the world aluminum
market with respect to price, because the
Pacific Northwest, which is my native
region, today produces some 35 percent
of the American total aluminum produc-
tion, and I know that many of the men
engaged in supervising the production of
aludinum in the Northwest, and in
working in those plants, have been con-
cerned by the effect of the delivery of
Russian aluminum in the British mar-
ket at 2 cents less a pound than the pre-
vailing world price.
Mr. Dulles states that the U. S. S. R..
may well, in time, become a major sup-
plier of other metals, petroleum, and
other industrial necessities to Western
Europe, with these consequences:
Soviet ability to use trade as a weapon to
advance its political aims will increase in a
direct ratio to their success in realizing
their economic goals.
For example, once they have penetrated
Western European markets to the extent
that these markets become substantially de-
pendent an Soviet industrial raw materials,
they will have available a new and formi-
dable weapon of economic warfare. By with-
holding supplies, by capriciously raising
prices, or by dumping commodities, the
Soviets in effect will have a seat at the
council table of the great industrial nations
of Europe.
I believe, Mr. President, that I have
quoted enough of this sober analysis by
CONGRESSIONAL RECORD - SENATE ,
Mr. Allen W. Dulles, Director of the Cen-
tral Intelligence Agency, to indicate the
magnitude of the Soviet potential for
adding an economic cold war to the
other, familiar techniques in the Com-
munist arsenal. The picture of the
U. S. S. R. at the political council table
of Western Europe is not a reassuring
one for the United States or for democ-
racy. But if it happens, we cannot say
that we have not been forewarned. Mr.
Khrushchev's challenge of competitive
coexistence is an open one. And we
must remember that economics, and not
military warfare, is the original battle-
ground on which the Communist ideol-
ogy has challenged Western, private-
property democracy as a doctrine of so-
ciety and government. If there is to be
competition, let us welcome that it is to
be in this realm of alternative roads to
material, economic, and social accom-
plishment-the realm which is most
hotly contested between the United
States And our Communist adversaries,
and in which we both have staked out
major claims. Certainly we shall not
regret that it is not to be on the field of
battle. But let us also remember that
the victory in this contest of economics
and politics is not to be won inside
Russia, or inside the United States, but
in the vast -bulk of the world which is
neither.
UNITED STATES POLICY HAS RECOGNIZED WORLD
NEEDS FOR ECONOMIC AID
Certainly, the record of postwar
American policy shows that we have
recognized that fact. This recognition
led to the epoch-making Marshall plan
for Europe, to our active and unstinting
support for the World Bank for Recon-
struction and Development, and to the
point 4 technical-assistance pro-
gram. Most recently we have recog-
nized, in the resolution expressing our
support for India's 5-year plan that
was offered by the Senator from Massa-
chusetts [Mr. KENNEDY] and the Sena-
tor from Kentucky [Mr. COOPER], the
decisive importance of whether the de-
velopment of this vast rAtion shall find
its sources of capital-and itj sources of
inspiration-in the democratic West, or
in communism.
I desire to emphasize in this connec-
tion my support for the very forward-
looking and thoughtful resolution sub-
mitted in the Senate by the Senator
from Massachusetts [Mr. KENNEDY]
and the Senator from Kentucky [Mr.
COOPER].
Yet our recognition of the importance
of economics to our foreign policy has
been expressed largely in a single class
of programs-programs of foreign aid,
such as those I have just mentioned.
With the possible exception of some of
the technical assistance programs, these
have taken the form of extensions of
credit, money grants or gifts of specific
economic equipment and commodities to
or through the governments of the re-
cipient nations. The foreign-aid pro-
grams have carried almost the whole
burden of our foreign economic policies,
while our policies toward other forms of
international economic intercourse even
with the same nations, such as trade and
private capital investment, seem to be
June 3
based on domestic, economic, and com-
mercial considerations without much re-
gard for our foreign policy objectives.
Thus, in fact, these domestic American
considerations may sometimes appear
themselves to be our main foreign policy
objectives in such nations.
U. S. S. R. HAS ADVANTAGE OF MORE FLEXIBLE,
COMBINED PROGRAMS
Mr. President, the greater measure of
Soviet governmental economic control,
mentioned by Mr. Allen Dulles, to which
A have referred, permits the U. S. S. R.
to mix aid, trade, loans, and,personnel
exchanges in formulating foreign eco-
nomic programs tailored to meet the
needs of Soviet policies in different coun-
tries and under changing conditions.
Because of this mixing of the ingredients
of grants, loans, trade, and other forms
of economic activity, and the absence of
private trading, Soviet foreign economic
programs cannot readily be compared
with United States or Western economic
relations with respect to the same
country. This was cogently pointed out,
for example, in an analysis of Soviet
and United States programs in Afghan-
istan, which was sent me by the Inter-
national Cooperation Administration at
the suggestion of Mr. Sheldon Mills, our
Ambassador to that country.
Ambassador Mills is a very distin-
guished career diplomat and a constitu-
ent of mine from Oregon-although his
duties in our Foreign Service force him
to be an absentee constituent much of
the time-and he and I had occasion
on his last visit to Washington to dis-
cuss the question of the comparative
Soviet and American programs in Af-
ghanistan.
For example, the report on Afghan-
istan sent me by ICA explains that-
One important distinguishing character-
istic of-Soviet-block aid is that it is gener-
ally presented on a long-term basis without
reference to annual commitments, and in a
package form which may include. a long-
term line of credit, technical assistance,
training, military assistance and, in particu-
lar, increased trade opportunities. Such sin-
gle package offers can have great appeal,
particularly when the recipient country is
having difficulty in marketing its export
products.
Although direct grants of assistance
by the United States far exceed the
amount granted outright by the
U. S. S. R., the total achievements of
the combination Soviet package may
appear disproportionately effective to
the local population, particularly if they
are channeled into projects which are
chosen and designed to produce such
an immediate impact that they have an
economic dramatic effect. For instance,
reporting on the Soviet package in Af-
ghanistan, ICA states:
Although perhaps less than one-fourth of
the credit extended under the economic aid
agreement has been drawn down, substan-
tial progress has been reported on many of
the projects covered by the agreements.
Streets of Kabul were paved and one as-
phalt factory near Kabul was completed
with a line of credit extended in 1954. Con-
struction has been completed on a grain
silo, flour mill, bakery, petroleum storage
tanks and cement plant. Surveys have been
made or construction begun on various other
projects, including a new highway over the
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1958 CONGRESSIONAL RECORD -SENATE
Hindu Kush Mountains and airport con-
struction. A number of buses and taxicabs
were delivered, and also equipment for a
100-bed hospital. Although a substantial
part of the $100 million credit from the
U. S. S. R. has been obligated for specific
projects, actual expenditures to date have
probably been relatively small.
The report points out that the Soviet
foreign economic programs are aided
by the ability of the Soviet Government
to commandeer and assign Russian
technical personnel and needed equip-
ment for such programs, and to design
the specific projects themselves with an
eye only on the desired policy goals, and
without close regard for costs or eco-
nomic feasibility, because the U. S. S. R.
can, for political expediency, absorb any
loss which may be inherent in any par-
ticular transaction.
When Ambassador Mills was in Wash-
ington some weeks ago, I had the oppor-
tunity of having breakfast with him in
the Senate dining room. He emphasized
to me at that time the importance of
Congress passing the Mutual Security
Act and sending it to the President for
his signature. He said that without the
foreign aid being made available to him
and our other American representatives
in Afghanistan, where he is our chief
diplomatic spokesman, he would be abso-
lutely helpless in combatting the propa-
ganda and the efforts of the Soviet Union
to bring Afghanistan into the Soviet
orbit.
A very recent report prepared for the
Committee for Economic Development
stresses these same points. According
to a review of this report in the Washing-
ton Post and Times Herald of June 1,
entitled "Red Trade Gain Cited in
Study," Afghanistan, Egypt, Indonesia,
Nepal, Syria, and Yemen have received
far more economic aid from the Soviet
bloc than from, the free world. This
again is consistent with what I was told
by Ambassador Mills during his recent
visit here.. Thirty-two percent of In-
dia's aid and 40 percent of Ceylon's are
said to have come from the Soviet bloc.
At the same time, the report states that
the Communists have made trade expan-
sion a full partner with assistance in
their economic offensive outside their
own area, particularly in Latin America,
where Soviet trade expansion has been
609 percent from 1952 to 1956, particu-
larly with Argentina, Brazil, Cuba, and
Uruguay. Mr. President, I ask unani-
mous consent that the Washington Post's
article on this report for the CED be
printed in the RECORD at this point of my
remarks.
There being no objection, the article
was ordered to be printed in the RECORD,
as follows:
[From the Washington Post and Times Herald
of June 1, 1958]
RED TRADE GAIN CITED IN STUDY
(By Carroll Kilpatrick)
Russian-bloc countries increased their
trade with Latin America 609 percent from
1952 to 1956-a greater increase than with
any other part of the world, a study prepared
for the Committee for Economic Development
reported yesterday.
"The Communists have made trade expan-
sion a full partner with assistance in their
economic offensive outside their own area,"
the study, by Michael Sapir, said. The aid
program, he wrote, has a different emphasis
in three distinct areas of the underdeveloped
world.
In Asia and Africa, the Communists are
concentrating on economic development aid;
in the Middle East, on aid and trade, but in
Latin America "the emphasis is on increasing
trade," Sapir~said.
"In Latin America, the increase has taken
place primarily because of vigorous efforts by
eastern European countries," he reported. "A
network of direct agreements has been estab-
lished, with liberal credit provisions fea-
tured."
Latin America's principal imports from
the Communist countries have been coal,
machine tools, railway rolling stock and agri-
cultural machinery. Principal exports have
been meat, leather goods, and animal hides,
sugar, coffee, and wool.
FOUR COUNTRIES INVOLVED
Sapir said the Soviet bloc, including Com-
munist China, has concentrated on increasing
trade with "a relatively few underdeveloped
countries." Four countries in Latin America
are chiefly involved: Argentina, Brazil, Cuba,
and Uruguay.
"They account for practically all of Latin
American-Soviet trade at present," he said.
Sapir is a student of international economics
who has specialized in affairs of underde-
veloped areas.
"The Communists are attempting to create,
in the eyes and minds of the underdeveloped
nations, the image of a widespread, richly
varied but unified Communist world, similar
in scope, variety and resources to the free
world, available and capable no matter what
the problem," Sapir wrote,
While the Communists have expanded
their relations with the non-Communist
world in general, "they have concentrated
increasingly on a 'trade and aid' program
with the underdeveloped areas, and within
the underdeveloped areas to uncommitted
nations," the report said.
Sapir noted that only a very small amount
of Soviet aid has been sent to countries re-
ceiving arms aid from the United States.
But the uncommitted countries are receiving
a substantial amount of Communist-bloc aid.
Afghanistan, Egypt, Indonesia, Nepal,
Syria, and Yemen have received far more eco-
nomic aid from the Soviet bloc than from
the free world. Thirty-two percent of India's
aid and 40 percent of Ceylon's has been from
the Soviet bloc.
CONTRAST WITH UNITED STATES AID
In an introduction to the study, Herbert
Stein, CED's, director of research, said that of
America's total foreign aid in the 11 years
from 1945 to 1956 some $10.6 billion, or less
than a fifth went to underdeveloped coun-
tries, and some $3.5 billion of that was for
relief work.
Sapir said his study showed that the
Soviet bloc "is capable not only of sustain-
ing the economic drive currently underway
but has the capacity to increase the effort
several times over."
He said the Soviets are "constantly * * ?
probing for weak spots in the free world
which can be exploited by a variety of means
and to a myriad of costumes and poses * * *.
"Probably the greatest and clearest type of
danger to the free world is the success of the
Soviets in winning major influence in the
Arab world, notably Egypt and Syria. * * *
"The Communists are moving more slowly
and less directly in Afghanistan, close to the
border of sensitively neutral India." He said
Russia also is concentrating on Indonesia's
"troubled waters" with apparent success.
Sapir held out the possibility that Com-
munist bureaucratic methods and poor qual-
ity goods may cause the Soviet bloc trouble
in the underdeveloped countries.
"It would seem reasonable to expect that
the longer the bloc programs are in existence,
and the wider their efforts, the greater the
likelihood that the Soviet and its satellites
8967
will stub their toes, making many of the
errors we have made and others of their own
invention," Sapir said.
"There is evidence that such countries as
India, Pakistan, Turkey, or Burma and Cey-
lon are increasingly concerned about the
political intent of the Soviet bloc, but con-
cern alone, often, is not enough to frustrate
Soviet ambitions."
Mr. NEUBERGER. Mr. President, I
do not propose today that we change
our economic aid programs in under-
developed countries so as to imitate
Russian methods. I am not now ad-
dressing myself to the mutual security
and technical assistance programs,
which already have been studied thor-
oughly and recently under the auspices
of the Committee on Foreign Relations.
My point, rather, is to illustrate that
effective foreign economic policy in-
volves more than foreign aid. If eco-
nomic means are effectively to aid in
the attainment of our foreign policy
goals, then the proper relationship of
trade, of credit and capital transactions,
of technical assistance and of other eco-
nomic activities-both private and gov-
ernmental-to these foreign policy goals
needs as urgently to be considered by
the Senate as were the foreign aid pro-
grams themselves.
That is what is proposed in the reso-
lution I am submitting today.
TASK OF FOREIGN ECONOMIC POLICY LIES
WITHIN WEST ITSELF
Mr. President, I have spoken at some
length about the economic challenge
being presented to us by the U. S. S. R.
throughout much of the world. Our
Soviet adversary is rapidly developing
the economic strength to make that
challenge effective; yet as of now, the
gap between that strength and ours is
still so vast that any Soviet opportunity
for success is largely a measure of a fail-
ure on our own part.
The greatest area where our foreign
economic policy badly needs review,
however, is one in which a direct con-
test with Soviet economic penetration
does not yet-and, let us hope, never
will-play a really major role. That
area is the West itself-Western Europe
and the twin continents of North and
South America.
Here, on the two sides of the Atlantic,
are both the 'most industrialized and
some of the resource-richest regions of
the world. In both natural and capi-
tal resources-if combined-this West-
ern World so far outdistances the Com-
munist bloc that what may look like a
competition, when measured between
the United States and the U. S. S. R.,
proves in fact to be no contest at all.
It is here, within the West itself, that
the success or failure of Western eco-
nomic and political philosophy must
prove itself. If we succeed here, with
the vast resources at our combined com-
mand, the Atlantic economy will act as
an irresistable magnet to the develop-
ment of the so-called uncommitted
nations of Asia where communism now
offers actual competition. If we do not
succeed in finding policies and systems
for ordering these resources our joint
economic growth, stability and prosper-
ity, however, then the West risks the
loss not only of these nations for the
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CONGRESSIONAL RECORD - SENATE
free world-but eventually its own dis-
integration.
Here, as it seems to me, is the greater
challenge to the foreign economic policy
specifically of the United States, which
today is the dynamo of the entire West-
ern World.
Here, too, is the area where our for-
eign economic policies most deserve the
intensive study of a special committee
of the Senate, with the authority and
the mandate to cut across all the sepa-
rate lines of our national policies and
programs in a unified inquiry into their
impact on our national objectives in
the world. For it is right in this Atlantic
area itself that the last few months and
even days have shown us the crises that
make a review of United States poli-
cies so timely and even urgent today.
Our relations with Canada have de-
teriorated largely over economic issues,
which have lent much popular support
to talk of more nationalistic attitudes
and policies in that country. These eco-
nomic issues began-at a time of expan-
sion-with impatience over the manner
of United States business investment
and control in Canada. When expan-
sion turned to recession, new, impor-,
tance was added to old issues of tariffs
and wheat markets and quotas. Our
relations with Canada were not helped
wheal, _last December 24, President
Eisenhower imposed.the miscalled "vol-
pntary oil quotas" against the import
of Canadian oil to the United States west
coast-an action which led to violent
but unsuccessful protests from the Ca-
nadian Government. And we have
failed outrageously in one step that
could well serve as a pattern for imagi-
native and resourceful statesmanship in
foreign economic policy-the negotia-
tion of an agreement with Canada for
the mutually beneficial development of
the upper Columbia River Basin, in
which rests a large share of the vast
economic promise of western Canada.
Mr. President, r should also like to
point out that the same type of mutually
beneficial agreement should be reached
between Canada and the United States
with respect to the great headwaters of
the Yukon River, where the Yukon ter-
ritory of Canada and the Territory of
Alaska potentially share in one of the
great hydroelectric resources of the en-
tire world.
Our relations with Latin America, as
with Canada, are also inevitably in-
volved in our actions on such matters as
the oil quotas and mineral imports.
Press reports since the regrettable and
shocking demonstrations of anti-Ameri-
canism, on the occasion of the Vice Pres-
ident's appearances in Venezuela and
Peru, have emphasized the importance
of dissatisfaction with United States
economic policies in Latin American
public opinion. The two countries in-
volved in these demonstrations are, per-
haps, no coincidence. Oil, of course,
is the foundation of Venezuela's econ-
omy as much, or more, than it is that
of Texas' or Oklahoma's. And, as Dep-
uty Undersecretary of State Douglas
Dillon recently told the Senate Interior
Committee, 15 percent of Peru's com-
modity exports are lead and zinc, and
two-thirds of these go to the United
States. Add copper, and more than half
of Peru's total dollar earnings are di-
rectly involved in United States min-
erals policies. The figures for Chile and
Me ico are equally impressive. The di-
rec relationship between United States
trade and Soviet economic penetratign
in Latin America was also reviewed in
a brief article in Fortune magazine for
April 1958, and I ask that it be printed
at the conclusion of my remarks.
There being no objection, the article
was ordered to be printed in the RECORD.
(See exhibit 3.)
Mr. NEUBERGER. Mr. [President,
nothing could be more effective than
Secretary Dillon's testimony to demon-
strate that no longer can we make na-
tional policies on oil, on minerals, on
other commodities, and on trade gen-
erally, simply as domestic economic de-
cisions. We cannot have all United
States governmental decisions made by
the State Department, nor channel all
legislation through the Committee on
Foreign Relations. The legislative com-
mittees of the Senate-such as the Com-
mittee on Interior and Insular Affairs-
can be counted on to give needed recog-
nition and weight to the impact on our
foreign policies of the measures that
come before them, but they cannot all
independently study this complex field.
That is why I propose a single, unified
Senate study to provide us with a long-
range perspective and overall frame-
work of United States foreign economic
policy and its significance for the na-
tional economy.
UNITED STATES TRADE KEY FACTOR IN ECONOMY"
OF WEST
Mr. President, I have referred to the
overwhelming concentration of capital
and natural resources which makes the
West itself the area in which our econ,-
omic policies for a free world must suc-
ceed or fail, and I have indicated that
the United States economy itself is the
dynamic heart of this concentration, on
which the bloodstream of the whole de-
pends.
This fact is borne out by an analysis
of our foreign trade. I have asked the
Legislative Reference Service of the Li-
brary of Congress to breo down the
total of United States exports and im-
ports in 1956 by different -pertinent
groupings of the nations with whom we
traded. These groupings include, ,first,
the nations of the European Cofnmon
Market-France, Germany, Italy, Hol-
land, Belgium, and Luxembourg. Second,
the so-called Free Trade Area that has
been suggested by Great Britain to in-
clude also the Common Market nations,
Scandinavia, Austria, and Switzerland-
in effect, almost all of Western Europe.
Third, the 15 countries of the North At-
lantic Treaty Organization. Fourth, the
Latin American nations of the Organ-
ization of American States. Fifth, the
nations which met at the Bandoeng
Conference, which included about 30 of
the Asian, Near Eastern, and African
nations. Sixth, I have singled out Ja-
pan, because so much of the controversy
over trade policy involves that one coun-
try. Seventh, our trade with the Soviet
bloc. Mr. President, I ask unanimous
June 3
consent that the table be printed at this
point in the RECORD.
There being no objection, the table
was ordered to be printed in the RECORD,
as follows:
TABLE 1.-United States trade with groups of'
countries
[Dollars in millionts]
Per-
cent
Total----------------
$19,066.0
$12, 736.5
European common
market-______-_---
2,871.2
15.1
1, 428.8
Freetrade area ------
4, 431.4
23.2
2,667.8
NATO countries----
8, 184.7
42.9
5,378.3
OAS countries-----_-
3,687.0
19.3
3,668.9
Bandoeng Confer-
ence countries.--__
2, 384.2
12. 5
1,771.8
Japan----------------
894.6
4.7
557.8
Soviet bloc ----------
119.8
.6
91.0
Per-
cent:
11.2
20.9
42.2
28.8
Mr. NEUBERGER. Mr. President,
these figures*show that almost 20 per-
cent of our exports and almost 30 per-
cent of our imports, in 1956, were in trade
with Latin America. They show that
more than-42 percent of our trade was
with the nations of the North Atlantic
alliance. Very roughly, they indicate
that about two-thirds of all United States
foreign trade takes place within the great
Western area that I have mentioned, and
less than one-sixth of United States
trade is with Asia, including Japan, and
with the Communist world. The latter
accounts for less than 1 percent.
This illustrates the extent to which,
as I have said, United States trade and
economic policies are a question of our
policies for the West itself. How much
this is true when limited even more
specifically to the North Atlantic com-
munity itself is shown by another table
prepared for me by the Legislative
Reference Service, which I ask unani-
mous consent to have printed at this
point in the RECORD.
There being no objection, the table
was ordered to be printed in the RECORD,
as follows:
TABLE 2. External trade of NATO countries
(including United States)
[Dollars in millions]
As per-
cent of
world
total
As per-
cent of
world
total
Total -_---_----__
Internal (with
other NATO
countries)------
40,334.3
43. 2
42, 535.9
44.7
World-----------
93, 327.9
100.0
95, 225.4
100.0
Mr. NEUBERGER. Mr. President,
looking only at the 15 members of the
North Atlantic Treaty Organization,
which is the chief alliance of the West-
ern democracies and the keystone of our
foreign policy, we find that the foreign
trade of these nations, including the
United States, constitutes about 60 per-
cent of -all the international trade in the
world. More impressively, the internal
trade of the NATO nations among them-
selves alone-eliminating their trade
with the entire rest of the world, and
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CONGRESSIONAL RECORD- SENATE
Or must we not, rather, modify national-
ism at least enough so as to offer a com-
munity of positive goals to those whom
we ask to share a community of defense
against communism?
As early as July 29, 1955, in testimony
before the Committee on Foreign Rela-
tions, I spoke of the necessity of prepar-
ing for a shift in emphasis from military
to economic and political functions for
joint NATO institutions. I then stated:
The problems of world trade and currency
transfers exist-except for the case of Ja-
pan-almost wholly within the Atlantic
community itself. They should be treated
as internal economic problems by institu-
tions of that community. * * * At the very
least the Organization for European Eco-
nomic Cooperation, OEEC, should be ex-
panded into an Organization for Atlantic
Economic Cooperation, so as to include Can-
ada and the United States.
Mr. President, I have seen nothing in
the intervening 3 years to change the
views I expressed then, and much is
happening at this very time to confirm
them.
Other voices, including those of per-
sons more expert than I, are being raised
in the effort to gain recognition for the
significance of an economic policy for
the West. Two weeks ago, the highly
respected National Planning Association
called for the development of nonmili-
tary, and particularly economic, institu-
tions for the Atlantic community, to or-
ganize a meaningful and promising
economic program for the future devel-
opment of the free world. I am proud
that the presidential candidate of the
Democratic Party in the past two elec ,
tions, Adlai E. Stevenson, has been in
the forefront of those who have sought
to anticipate and to meet the challenge
of peacetime corhpetition, rather than
military aggression, to the Western
World. I ask unanimous consent to have
printed at this point in the RECORD the
excellent lead editorial entitled "Free
World To Work," which was published in
the Washington Post last Sunday, June
1, because it reviews so cogently the
points which I have tried to mention in
my speech today.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
[From the Washington Post of June 1, 1958]
FREE WORLD To WORK
In a time that cries for ideas, Adlai Steven-
son has supplied one that deserves to be
taken up, developed, and applied. Mr.
Stevenson's concern is the growing free
world economic crisis which he believes is far
more serious in its implications than even
the paralysis that beset Europe in 1947. Why
not, he asked in an extremely thoughtful
address at the University of Louisville a few
days ago, establish a committee of experts
comparable to the group which laid the
groundwork for the Marshall plan in 1947?
Their function on an international basis
should be to prepare an agenda for the re-
generation of the free world economy upon
which the nations can agree and act with-
in a year.
The crisis has its roots in the breakdown of
the old trading system symbolized by Britain
and grounded on low tariffs, high lending,
and reserves flexibly based upon gold. De-
spite substantial American aid and invest-
ment programs since the war, the gap be-
tween the American standard of living and
8969
those elsewhere in the free world is steadily
widening. Last year, for example, the United
States had a favorable balance of trade of
some $7 billion-which meant that we sold
that much more than we bought. In that
same year falling raw material prices re-
duced the income of producer countries by
some $750 million.
If the United States were now investing
in development abroad at the same rate as
Britain in her heyday as a creditor nation,
the total of public and private lending would
have to be at least tripled-and some au-
thorities say it would have to be increased
by as much as 30 times. That is a measure
of the imbalance. Although there has been
much praiseworthy internationalism in our
outlook since the war, the practical effect
of our policies still has much isolationism
to it; we are enriching ourselves while the
remainder of the world falls behind. And
while the free world is thus economically
disunited, the Communists broaden and in-
tensify their economic offensive, commiser-
ating with nations that rely upon the West's
failing capitalism. "One thing you don't
find," Mr. Stevenson notes pointedly, "is a
really isolationist Communist."
Today the capital hunger in some areas of
the world is so great that it can be heard
gnawing. Indeed, there will have to be pri-
mary infusions before there can be even the
rudimentary expansion to foster private
growth; there can be no doctrinaire blinders
about socialism respecting countries which
grasp at almost any slogan for improvement.
Different manifestations of the same crisis
of imbalance, of course, affect some developed
nations as well. The World Bank, the Inter-
national Monetary Fund, American reciprocal
trade and assistance programs, the United
Nations, Senator MoNRoNey's soft-loan bank
plan-all these are part of the answer. But
they need direction.
Unity of concept thus is a first require-
ment. Specifically, Mr. Stevenson would have
the committee of experts seek means of re-
gaining momentum in economic expansion-
an overall growth of 5 percent annually that
would minimize inflation; build new links
with the European Common Market and free
trade area so as to avoid new protectionist
walls; expand investment in underdeveloped
areas; and stimulate additional working capi-
tal for trade and convertibility.
It follows that the United States is by no
means alone in having resources to contrib-
ute. Germany, Britain, France, Canada, Ja-
pan, and other nations are now investing
abroad,, and they could help more in a dis-
tributed effort. Obviously, such help should
not be unrequited. A basic essential is self-
help, which means the sort of stocktaking
and housecleaning in prospective recipient
nations that underlay the Marshall plan.
Americans distressed by the waves of antf-
Americanism that have broken in South
America and the Near East could devote
themselves to no more constructive purpose
than developing such a catalyst. There is
no short-term answer to such outbreaks,
which are more symptomatic than causative;
and in any event the country should concern
itself with more than short-term remedies in
the situation that confronts it. The basic
problem is economic, and the basic require-
ment is to marshal the resources of the free
world-through investment, raw materials
stabilization, and the like-in such a way
that they complement each other.
Some years ago Clare Boothe Luce referred
derisively to such globalism as "globaloney."
The plain truth is that the subject of yester-
day's scoffing has become today's realism. We
are finding more and more that we are liter-
ally our brothers' keepers, and that their
health intimately affects our own. Mr.
Stevenson appeals for the foresight, energy.
and patience of Marshall, Acheson, Truman,
Vandenberg, Bevin, and Monnet in organizing
that means eliminating trade with Latin
America, with Japan, and with important
European and commonwealth democra-
cies which are not members of NATO-
constitutes about 44 percent of all the in-
ternational trade in the world.
This is a measure, Mr. President, of the
importance of our foreign economic poli-
cies to the success or failure of our non-
economic objectives and our noneco-
nomic programs in the foreign policy
realm. On the military and diplomatic
effectiveness of NATO, for instance, we
have staked an immense proportion of
our entire international political and de-
fense efforts. Does it not make sense to
study our commercial, monetary, fiscal,
and other economic foreign policies in
the context of this commitment of bil-
lions of dollars, and of our national secu-
rity itself, to a NATO policy, rather than
to regard them as a separate and dis-
tinct realm, to be judged by quite differ-
ent and largely domestic considerations?
FRENCH CRISIS IMPERILS WESTERN COMMUNITY
The question is daily gaining urgency
at this very time. None of us can tell
what the current crisis in France will
mean to NATO and to the various West-
ern European institutions whose develop-
ment we have so long encouraged. In
raising the questions about which I speak
today, I certainly do not pose as an ex-
pert in either economics or foreign af-
fairs. No such special knowledge is
needed; for these questions now confront
us in daily newspaper headlines. The
Washington Post and Times Herald of
last Saturday, May 31, published an arti-
cle by Don Cook of the New York Herald
Tribune News Service which reported
that impending French bankruptcy
threatened the end of the European
payments union and the proposed Euro-
pean trading institutions. On Sunday,
June 1, the New York Times reported
that "uncertainty over the future of
France has cast a darkening cloud across
the bright new plans for European eco-
nomic unification." Both articles pre-
dict grave difficulties for the common
market, and also the death of the pro-
posed greater free-trade area. I ask
unanimous consent that these informa-
tive and very ominous reports may be
printed at the conclusion of my speech.
There being no objection, the articles
were ordered to be printed in the
RECORD.
(See exhibits 1 and 2.)
Mr. NEUBERGER. Mr. President, we
can no more be indifferent to these de-
velopments than we could be to the pos-
sible collapse of the military structure of
NATO. For in the long run it is impos-
sible that we could maintain a military
stake in the Atlantic community, but re-
fuse to make any commitment to its eco-
nomic stability, growth, and future pros-
perity. The time may already have come
when the second is more important than
the first, in the light of the new challenge
from Soviet Russia which I have dis-
cussed. If we want to speak of a West-
ern community, can we expect very long
to hold to a view that in defense it is one
for all and all for one, but that in the
peaceful pursuit of prosperity it is every-
one for himself, and business is business?
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 a new American initiative: "I believe," he
says, "that my fellow Democrats will follow
an administration lead today as faithfully
and eagerly as many Republicans followed
the Democratic initiative 10, years Ago."
Ideas can move men and nations. This one
should. -
Mr. NEUBERGER. Mr. President, the
point of this speech, Mr. President, is not
to offer solutions or to recommend
specific proposals. There will be other
occasions for that. The point I make
today is only to urge that the Senate be-
gin now, and carry out in the coming
year, a thorough study of these chal-
lenges to our economic role and policies
in the world, which are daily being
brought so insistently to our attention.
If it is not already too late, certainly it
is high time to take this step toward
developing the understanding necessary
for effective action in the future. That
is why I hope that the committees of the
Senate responsible for such decisions will
give early and favorable consideration to
the resolution which I am submitting to-
day for my cosponsors and myself. The
resolution affects no present program, no
legislation before the Congress. It com-
mits us to no preconceived conclusions or
policies. All it can do is to permit the
Senate to place itself in the position of
giving serious, thorough, and nonparti-
san study and consideration to a most
important set of problems confronting
our Nation in today's world-and to do it
before a real crisis leaves us only the
opportunity for ex-post-facto investiga-
tions of failure. I urge the Senate to
undertake such a study now.
Mr. President, ahead of the other
articles I have asked to- have printed
after My remarks, I ask unanimous con-
,sent to place in the RECORD an excellent
editorial entitled "Trade: Weapon for
Freedom," published in the Christian
Science Monitor of May 23, 1958. This
editorial also most effectively states the
case for a bold, new approach to eco-
nomic policy which will look beyond the
narrow bounds of national commercial
self-interest to the greater objectives of
the Western, democratic contest with
communism.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
[From the Christian Science Monitor of
May 23, 1958 ]
TRADE: WEAPON FOR FREEDOM
The postwar struggle between the Soviet
and the free way of life proceeds on several
planes at the same time, but with changes of
emphasis and with the West usually taking a
defensive posture and replying to offensives
as they develop. The Western nations are
familiar with this shifting pattern. But they
have given less than adequate attention to
the new "front" where Soviet leadership is
probing.
The eight-nation conference now reported
from Moscow is a warning. It aims at or-
ganizing the resources of the Warsaw Pact
countries and enlisting the interest of the
whole Communist world in the possibilities
of extending the Communist system through
trade and aid within and without their com-
munity.
That Communist leadership regards trade
not as an end in itself but as a means of
cementing political controls has timely illu-
stration at Moscow. Yugoslavia is absent
from the conference. Reports indicate that
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the Moscow thermostat is raising the heat
on the too-independent South Slavs, and will
use trade devices among other things to do it.
Western peoples are slower, even reluctant,
to beat their economic plowshares of trade
into weapons of politics. Yet they need to
understand that unless they view their own
trade and aid policies-toward each other as
well as the rest of the world-as inextricable
from their efforts to build free-world security
these. efforts wilL be endangered.
In the recent weakening, of the Atlantic
community at its core the neglect to develop
closer economic relations among aides plays a
big part. Canadian-American and other
hemisphere frictions arise partly from eco-
nomic misunderstandings or downright mal-
practices. The feeling that Americans are a
source of largess may irritate Americans.
But it also irritates others who might not
need largess if trade policies consistent with
common military security operated in the,
Western World.
A challenge now urgently confronting
American, British, and West German leader-
ship in particular, with Washington hold-
ing the key for th initiative, is (1) to open
up the channels of trade within the West-
ern community, and (2) to marshal Western
resources for aid to underdeveloped regions-
aid that need not have American strings.
Some Western leaders are already calling
for this. Limited illustrations of the idea
already exist in United Nations efforts, in
cooperation between American and British
programs in some parts of the world, and so
forth.. The internal development of the
West necessary to real external strength
is just beginning in such organizations as
the European Common Market. But the
West is dangerously far from being ready
to answer to trade and aid offensives shap-
ing up in the Communist world.
This is much more than an economic mat-
ter. It is an axiom of international politics
that wherever one side in a contest leaves
a power vacuum-an area inadequately de-
fended or inadequately organized-the other
side will fill it. "Nature," as they say in the
laboratories, "abhors a. vacuum." . But the
old concept of power vacuums has acquired
a new dimension in this age. Power vac-
uums can be created-and filled-as surely
by economic as?by political or military poli-
cies.
The expansion or contraction of a nation's
area of influence, like the Soviet orbit . on
the one hand, the free world on the other, is
now a matter for economic engineering. It
is no longer a one-nation job. One or
another nation will lead In the organiza-
tion of the resources of its own moral neigh-
borhood for the economic development of
the world's present political no man's lands.
That nation will make the stronger bid to
maintain its own way of life.
EXHIBIT 1
[From the Washington Post and Times
Herald of May 31, 1958]
FRANCE NEAR BANKRUPTCY, IT TELLS ALLIES-
FINDS IT IMPOSSIBLE To Go DEEPER INTO
EUROPEAN PLANS
LONDON, May 30.-The French Govern-
ment has informed its European partners
that it faces a financial crisis verging on
bankruptcy in the next 6 weeks, and that
it cannot negotiate further on a European
free-trade area and may not even be able
to implement the already-ratified European
Common Market Treaty.
This warning, it was learned through
diplomatic sources in London, was conveyed
to a meeting of the "European six"-Italy,
West Germany, France; and the three Bene-
lux countries-at Brussels last week by
Maurice Faure, Minister of State for Eu-
ropean Affairs in the outgoing Pflimlin
government.
'June 3
This warning, however, is also believed to
hold true for the incoming government of
Gen. Charles de Gaulle as well-particularly
the death knell which has been sounded
for the British sponsored European Free
Trade Area plan which the French have
never liked much anyway.
Moreover, the warning also confronts
Europe with an immediate policy crisis in
one of its most successful postwar institu-
tions-the European Payments Union. The
current EPU agreement, which has been in-
strumental in the clearing of trading ac-
counts and liberalization of trade policies
for all of Europe for the past 8 years, ex-
pires June 30. Negotiations for its renewal
were to have opened shortly.
France, however, is already more than $400
million in debt to the Payments Union, and
the deficit was increased by another $58.3
million in April, according to latest figures.
The incoming De Gaulle government might
well decide on a suspension of trade liberali-
zation and a policy of greater economic isola-
tion to try and curb the plunge into bank-
ruptcy.
The main purpose of the Brussels meeting
of the six powers was to discuss their common
attitude toward the free trade area plan.
France had prepared a memorandum which
the other Europeans wanted modified to meet
British views more nearly, but at the end
of the discussion, Faure stated his govern-
ment's position quite bluntly.
France was verging on bankruptcy, he said,
and it was pointless to discuss any further
modific!tions in her counterproposals on free
trade. Moreover, although the European
Common Market Treaty is due to come into
force January 1, 1959, the financial situation'
was so serious that France might not be able
to implement these obligations.
It is too early for other European govern-
ments to have assessed this impact' of the
French crisis on their basic policies-but no
government expects General de Gaulle to
take a more positive or liberal attitude than
the outgoing Pflimlin government, and the
dismal, inevitable conclusion must be, there-
fore, that the slow but steady process of
European integration is now to . be halted,
if not thrown into reverse.
EXHIBIT 2
[From the New York Times of June 1, 1958]
STRIFE IN FRANCE SNAGS TRADE PLAN-C OM-
MON MARKET SET BACK BY WOES IN ALGERIA,
LACK OF A REGIME IN PARIS-UNIFICATION
IS STALLED-REVISIONS OR ABROGATION OF
THE SIX-NATION AGREEMENT ARE FEARED POS-
SIBLE
(By Brendan M, Jones)
Uncertainty over the future of France has
cast a darkening cloud across the bright new
plans for European economic unification in
which she is scheduled to play a major part.
Even before it worsened, France's deep in-
volvement in the Algerian problem had been
delaying the negotiations for the European
free trade area. This proposed partnership
of European nations for advancement of
their most vital economic activity was to
complement the small Common Market
union.
The latter, comprising France, West Ger-
many, Italy, The Netherlands, Belgium, and
Luxembourg, provided for their gradual eco-
nomic integration under the spur of mutual
reduction of trade barriers. An initial 10
percent cut in duties has been scheduled for
next January 1.
The Common Market, or by its official title,
the European economic community, was es-
tablished by a treaty which technically is
irrevocable. Before its adoption in March
last year, however, it had to be considerably
modified to make it acceptable to France.
It was well hedged with delaying clauses
and exceptions to cushion the shock of freer
trade to France's highly protected economy.
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TIMETABLE IN DOUBT
Nonetheless, the agreement retained a
fairly exacting time schedule for its basic
objective of trade-barrier removal. It set a
transitional period of 12 to 15 years in
which a fully free trade market was to be
achieved. But it added the broad provision
that reductions were to be made by the
member countries "if permitted by their
general economic situation and the condi-
tions of the sectors (industries) concerned."
On the surface this would seem to be a
fatal loophole. But the treaty itself incor-
porated commitments to principles requiring
conscientious and constant efforts by the
partners to implement Its flexible blueprint
for a stronger, more prosperous future.
In short, the agreement was recognized as
one that could succeed only through willing
cooperation, not by compulsion. Besides the
freeing of trade, it also called,for a freer
movement of capital, services, and labor
within the community and expansion of in-
dustry and new development projects.
Among other activities, a special fund ex-
ceeding $500 million was to be set up for
economic development in overseas territories,
mainly those of France.
Despite its shortcomings the treaty was
hailed as a major stride toward economic and
possible political federation. Its designers
have been confident not only that it would
ultimately succeed, but also that it would
be carried out with a minimum of delay.
But it appears doubtful whether France
will be in any condition to carry out her
commitments as scheduled. Whether this
will cause a delay in implementation of the
agreement generally, or whether the other
community members would proceed without
France is highly uncertain.
PACT IS UNDER STRESS
The unpredictability of what is likely to
happen in France is such that abrogation of
the agreement under a radically changed re-
gime cannot be ruled out. Indications that
a stronger central Government in France
would lead to imposition of economic aus-
terity do not auger well'for her participa-
tion in a free-trade arrangement.
But if the outlook for the common market
has been confused by the French develop-
ments, that for the free-trade area has not,
although the effect is negative. For this
plan to augment the common market move
has still to be drafted in treaty form. Ne-
gotiations, under the aegis of the Organiza-
tion for European Economic Cooperation, had
been going forward with the aim of reaching
agreement in time to synchronize the trade-
area plan with that of the common market.
As a major party to these negotiations,
involving the 17 Organization for European
Economic Cooperation nations, France had
been proving a main stumbling block to
agreement. But in addition, her preoccu-
pation with Algeria and another Cabinet
fall forced suspension of talks. In recent
weeks, hope for settlement of the trade-
area program this year have faded completely.
MASS OUTPUT IS GOAL
The free trade area proposal was largely a
self-protective move. It recognized that
fusion of six highly industrialized economies,
aided by a free market of 160 million con-
sumers, would bring lower cost mass pro-
duction into the heart of Europe. Sur-
rounding nations particularly would feel its
impact both in export trade and in their
home markets.
Additionally, the six nations ultimately
were to establish a single tariff. Exporting
to the six would become especially difficult
for other nations, unless reciprocal tariff-
reduction agreements could be effected.
The solution was the free-trade area, which
would include the six common market na-
tions and an auxiliary of other member na-
tions of the OEEC. Besides its practical
aims, the plan also has the virtue of extend-
ing trade liberalization already attained
through OEEC.
With the six-nation group, other prospec-
tive members who have taken part in the
recent negotiations are Britain, Ireland, Ice-
land, Denmark, Norway, Sweden, Portugal,
Switzerland, Austria, Greece, and Turkey.
At the outset of treaty negotiations last year,
agreement had seemed mainly a matter of
solving technical problems. Knottiest of
these in relation to desired uniformity in the
agreement seemed to be the devising of a
formula by which less developed countries
could continue some protection of new in-
dustries.
But French reluctance to make concessions
sought in the broader 17-nation bargaining
added to the technical complications. Time
was important since it was hoped that a
treaty could be completed and ratified so that
the entire trade area could meet a January 1
deadline for the start of the common market
tariff cutting.
This spring, the negotiators prepared to
consider new French proposals. Then the
Gailliard government fell and with subse-
quent delay in formation of a successor,
France could not negotiate. Meetings on the
trade area were suspended and, with France
increasingly beset by the Algerian crisis, they
could not be effectively resumed.
Hope now is gone for final agreement this
year, but a German proposal for a gentle-
men's agreement to allow tentative duty re-
ductions by January 1 has been offered. The
outlook for this stopgap is uncertain. Its
acceptance by France and resumption of
trade-area treaty talks with French partici-
pation are unlikely for the immediate future.
It has been evident, moreover, that even
if a treaty were completed this year, there
would be little chance of French ratification
for some time. With the approach of the
common market tariff reductions, French
opposition to the plans has apparently
grown.
UNIFICATION SET BACK
France, which has produced some of the
leading advocates of European federation,
also has been the source of major opposi-
tion to unification plans. She is the larg-
est single partner in the six-nation plan,
and a compromise on its original terms to
suit French requirements had emphasized
her essential role.
The cry that Algeria must remain French
is a disturbing omen. As part of Metropoli-
tan France, Algeria falls within the area of
the common market, and if Algerian tariffs
were reduced, German, Italian, Dutch, and
Belgian goods presumably would enter more
freely. A militant assertion of French rights
in Algeria would seem to make such a de-
velopment-should it ever occur-a cause of
more turmoil.
But under special provision of the com-
mon market treaty, Algeria was to be eligi-
ble also for grants from the investment fund
planned as economic aid to "overseas terri-
tories" of community members.
In Western Europe's need for greater pro-
duction and trade, economic unification has
seemed the effective course. The common
market has been viewed as a "metamorpho-
sis" through which its members jointly
could become a "third power" ranking eco-
nomically with the United States and Rus-
sia. The Free Trade Area has been regarded
as necessary to assure success of the com-
mon market and add further to European
economic vigor.
Even under strain of a big military
budget, and its aggravation of foreign-
exchange deficits, France's economy has
shown basic strength. Many French econ-
omists have urged European unification, de-
spite its initial difficulties. But others have
argued that France was not ready, that-her
industry would have to be further modern-
ized and that the exchange deficit would
have to be overcome before unification
could be started.
EXHIBIT 3
[From Fortune magazine of April 19581
THE BAD-NEIGHBOR TARIFF
United States tariff policy is also becoming
of increasing importance in Latin America,
particularly in view of Russia's new eco-
nomic offensive in the Southern Hemisphere.
While the United States remains Latin Amer-
ica's best customer-last year United States
imports from the area ran to about $3.8 bil-
lion, or some 45 percent of all its sales-
trade restrictions are constantly giving trou-
ble. A case in point: In 1951 the United
States wool lobby succeeded in getting the
tariff on Uruguayan wool tops raised to an
insurmountable height. Russia stepped into
the breach; is now one of Uruguay's biggest
wool customers (working through Dutch in-
termediaries). Among other things, the
move has enabled Moscow to use its Monte-
video Embassy as a central command post
for further economic infiltration.
Fresh from their successes in the Middle
East, Russian leaders are now intensifying
their drive into Latin American trade routes.
In 1957 Soviet-bloc countries offered to sell
arms to. Ecuador, to arrange a $30-million
wheat-for-coffee deal with Colombia, and to
supply Argentina with sorely needed capital
goods and oil. Then, a few weeks ago, came
the biggest carrot yet-a $40-million trade
package for Brazil.
Its contents:
Russia could buy Brazil's coffee, sugar,
hides, etc., sell the Brazilians oil, drilling
rigs, refineries, and, "with no political con-
ditions whatsoever," supply Rio with tech-
nical assistance and nuclear know-how. All
this in return for reestablishment of diplo-
matic relations with Moscow, which Brazil
broke off back in 1947.
Washington is not worried that latino
businessmen will immediately rush to take
these latest Red baits. Latin American coun-
tries in general are fully aware that in the
past Soviet shipments have often been poor
in quality, late in delivery, and sometimes
surprising in content-like the cargo of blue
glass eyes reportedly foisted upon Brazilian
importers in lieu of requested capital goods.
And the continent's coffee growers in particu-
lar are aware that Russia, a nation of in-
veterate tea drinkers, can dispose of its cof-
fee purchases only by dumping them on the
world markets. For these reasons, plus an
understandable hesitancy to incur United
States displeasure, the countries south of
the border have had little to do with the
Communist world. Last year these 20 repub-
lics, only 3 of which have diplomatic rela-
tions with Russia (Argentina, Mexico, and
Uruguay), did $220 million worth of busi-
ness with the Reds, or less than 3 percent of
their total trade with the outside world.
But what does worry Washington is the
fact that many a Latin American nation
finds it politically impossible at this junc-
ture to rebuff the Russian blandishments.
However dubious he may be about Russia's
offer, the fact remains that President Ku-
bitschek of Brazil has not flatly turned it
down. In Argentina, the head of a trade
mission off to collect a $30-million trade debt
incurred by Red nations since the war stated
flatly: "We urgently need machinery and
capital goods. We do not care where they
come from." And in Chile legislators are
talking about an emergency measure to per-
mit trade with the Soviet bloc. Pressure for
doing so has been visibly increased by de-
mands in this country for higher tariffs on
copper, lead, zinc, and other vital exports.
If these demands were met, United States re-
lations with Chile and Peru would take a
decided turn for the worse, and all Latin
American nations might conclude that Mos-
cow has something to offer after all.
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8972 CONGRESSIONAL 'RECORD - SENATE June 1958
RESOLUTION PRESENTED
to the President of the United States
the following enrolled bills and joint
resolution:
section 217 of the National Housing Act.
Mr. NEUBERGER. Mr. President, I
ask that the order for the quorum call
ADJOURNMENT
Mr. NEUBERGER. Mr. President, I
day, June 4, 1958, at 12 o'clock meridian,
NOMINATIONS
Senate June 3, 1958:
UNITED STATES ATTORNEY
Harry Richards, of Missouri, to be United
States attorney for the eastern district of
Missouri for a term of 4 years. He is now
serving in this office under an appointment
which expired July 16, 1957.
IN THE COAST GUARD
The following-named person to be a com-
missioned instructor with the grade of lieu-
tenant (junior grade), United States Coast
Guard:
Albert L. Wilding.
CONFIRMATIONS
Executive nominations confirmed by
the Senate June 3, 1958:
IN THE NAVY
he following-named persons to be
Navy, subject to qualifications therefor as
provided by law;
Eugene J. Peltier, Jr., midshipman (Naval
Academy), to be an ensign in the Civil Engi-
neer Corps of the Navy 'in lieu of ensign in
the line of the Navy as previously nominated
and confirmed, subject to qualifications
therefor as provided by law;
Maurice H. Manahan, midshipman (Naval
Academy), to be an ensign in the Navy, sub-
ject to qualifications therefor as provided by
law; and
James L. Denny, midshipman (Naval Acad-
emy), to be an ensign in the Supply Corps
of the Navy, subject to qualifications therefor
as provided by law.
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